Australian Stock Market Report – Afternoon 2/28/2013

AFTERNOON REPORT
(17:30 AEDT)

The tone of global investment markets has continued to improve in the last day. Concern about the Italian political landscape has continued to ease. Investor support at an Italian bond auction overnight led to a better atmosphere amongst European participants.In the US, figures released continued to paint an encouraging picture of the US housing market with pending home sales rising 4.5% last month compared to an expected increase of 1.0%

The ASX200 index rose 1.3% to 5104, while the broader All Ordinaries index rallied 1.3% to 5120. There were almost 2.3 billion transactions during the session, valuing turnover at $7.6bln. 603 stocks saw there price end higher on the day, 423 ended lower and 352 were unchanged.

Bank stocks were well supported today despite economic data which failed to provide a smoking gun for a rate cut from the RBA next month. Figures showed that business investment moderated in the December quarter. New business investment in buildings or equipment fell by 1.3 per cent in the December quarter. Mining investment rose by 2.9 per cent while manufacturing spending fell by 2.0 per cent and spending by other industries fell by 7.5 per cent. The modest drop in business investment is unlikely to register too heavily on the Reserve Banks radar, given that it was the first fall after nine consecutive quarters of investment growth. In fact, over the prior two years investment spending surged by 47 per cent to record highs. Elsewhere, lending numbers provided little evidence that households are eager to take on more debt. Private sector credit (lending) rose by 0.2 per cent in January after a 0.4 per cent rise in December. Annual credit growth rose held steady at 3.6 per cent. Housing credit grew by 0.4 per cent in January after rising 0.3 per cent in December. Housing credit is up 4.4 per cent on a year ago - the weakest annual growth in records going back to 1976.

Owner occupier housing credit rose by 0.4 per cent in January to stand 4.4 per cent higher than a year ago. And investor housing finance lifted 0.5 per cent in January to be up 5.6 per cent over the year. Personal credit fell by 0.1 per cent in January after rising by 0.2 per cent in December. Personal credit was down 0.3 per cent over the year, and has been falling in annual terms for 18 months. Business credit was flat in January after rising by 0.7 per cent in December. Business credit is 2.8 per cent higher than a year ago.

National Australia Bank rose 0.57 per cent to $30.20, Westpac rose 1.89 per cent to $30.77
ANZ Banking Group gained 1.56 per cent to $28.72, 'CBA finished trade higher by 1.91 per cent to $67.27. Macquarie Group settled with a gain of 0.51 per cent at $37.72

Retailers were solid improvers across the board. Australian retail giant Woolworths Limited (WOW) has increased its first half profit by more than 19% thanks to higher food sales at its supermarkets and a smaller write-down related to the sale of its under-performing Dick Smith business. NPAT came in at $1.15B for the six months to December 2012, while NPAT from continuing operations (excluding Dick Smith) and before significant items rose 5.5% to $1.24B, a solid result .Revenue rose 3% to $30.7B. WOW´s Food & Liquor business performed well, while Big W sales rose 3.6% to $2.4B. WOW also says its Home Improvement business is performing well, with 10 Masters stores opened in the period and another 5 on track to open by end FY2013. Woolworths tightened its FY13 guidance to 4-6% from 3-6% and lifted its interim dividend to 62cps, which will be paid on 26th April. WOW shares rose by 2% on open, and have risen 18% so far this calendar year, after rising 18% in calendar 2012. Woollies shares finished at $34.93 a gain of 92 cents or 2.7%. Elsewhere David Jones rose 2.2 per cent to $2.79, Myer gained 2.95 per cent to $2.79. Harvey Norman rose 9.21 per cent to $2.49, while JB Hi-Fi edged rose 2.94 per cent to $12.95.

A busy session of economic news looms for the US markets overnight, including Jobless Claims, a second estimate of US GDP along with the Chicago PMI.

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